AMCON, Not Arik Air, Owns Nigerian Eagle – CEO
Capt. Roy Ilegbodu, Chief Executive Director (CEO) of Arik Air, in this interview with OLUSEGUN KOIKI, spoke on the recent N5 billion palliative the Federal Government released to some organisations in the aviation industry, Nigerian Eagle Airline (NG Eagle) and the impact of Asset Management Corporation of Nigeria (AMCON) on the airline, amongst others. Excerpts:
Recently, the Federal Government through the Ministry of Aviation released to some organisations in the sector the sum of N5 billion as COVID-19 pandemic palliative; what is your say about this?
What I can say is that what we got was definitely not enough; we certainly could have done with a lot more.
The impact of the pandemic has been quite significant. As you follow news from all around the world, you see that it is the same situation everywhere.
Government has come massively in support of airlines, so, we did expect a bit more from government; however that said; we also understand that government itself faces significant challenges from all other sectors of the economy.
Therefore, we do not think of ourselves as unique. So, we appreciate the little we got. Something little is better than nothing.
I think that helped in its own little way aiding us to surmount some of the challenges we face.
We still face significant challenges going forward; we have challenges of foreign exchange; that is one big issue.
The exchange rate has virtually gone up significantly by approximately 40 per cent since COVID-19 pandemic outbreak.
You realise that our industry itself is quite tied to the supply from outside Nigeria. To support an aircraft with spare parts, you need all sorts coming in.
So, significant sums of monies are spent on maintenance. The airplane on a daily basis must be maintained. You can’t compromise maintenance of aircraft.
The tyres on an airplane, some people don’t realise how much we change those tyres, you can’t use an aircraft tyre for example the way you use your car tyres till they get burst. You have to change them regularly whether they look old or not.
So, you see that happening on a daily basis because of some of the rotables.
It’s quite significant for us to face all this and now coupled with the exchange rate, so we do need more help from the government.
As much as the government can give, we will appreciate, especially if that can resolve the issue of forex for us.
Passengers are not really travelling as much as before, we’ve seen that, however, some airlines may not notice that now because the capacity has also dwindled. What I mean by that is that the airlines have suffered so much that the fleet sizes have gone down.
Therefore, normally you will not notice that passenger numbers have dwindled, but as airlines start to recover, it will become apparent that people are no longer travelling as much as they used to do pre-COVID-19. But, the good news is that the vaccines are here and so it gives everyone hope.
I do expect that in the next few months there will be a lot more movement and things will start to come back to normal.
A lot has been said about Nigerian Eagle Airlines coming out from Arik Air; what is the true position?
Well, in reality, there is no connection between the two. That said you are aware that NG Eagle is solely owned by the Asset Management Corporation of Nigeria (AMCON) and of course you know that Arik Air itself is in receivership and the receivership was instituted by AMCON, which is based on the fact that Arik owes significant sums of money to AMCON. So, if you can infer from there, that’s the relationship.
What about the two painted aircraft in the maintenance facility of Arik Air?
I can boldly say that those airplanes in our industry we call it recovery.
So, they have been recovered. If a company owes and it cannot pay, those airplanes were actually mortgaged to AMCON and it is very clear that at some point they’d take their assets and that is what was done.
So, the fact that they carried the name and logo of Arik doesn’t mean they belong to Arik; the owners have taken their property.
Of course the opportunity was given to Arik to pay. I don’t think that happened.
So, I think it’s pretty straight forward. By law, those are mortgaged assets and the owners of the assets have every right to take their assets.
Information gathered indicates that Jet A1 (aviation fuel) has skyrocketed in recent times. How much is the product per litre at present?
Well, I can’t give you that information accurately here, but suffice it to say that aviation fuel is tied to the exchange rate.
Our aviation fuel is imported. So, anything that is imported is affected by enumerations in dollar/naira exchange rate. If we say forex has gone up about 40 per cent, then it is safe to say prices of Jet A1 have gone up too by about 40 per cent within the same period.
How much can the airline save on aviation fuel, if it doesn’t have to land on Runway 18Right for night flights and taxi to the domestic terminal?
There would be significant sums of savings; I can’t even begin to quantify it. It is actually a huge drain on not just Arik Air, but all the other operators that do night operations. That can be resolved by installing the runway lights at the local runway, but yes huge sums of money can be saved.
The cycle of an airplane begins when you start the engine and you are burning fuel, the wear and tear on the engine. So, for every cycle, it doesn’t matter if that cycle is from here to Benin or from here to London or from here to the United States, it is one cycle.
So, it costs money and that cost is the same whether it is London or Dubai, it is one cycle, it is one cycle.
For instance, the engine when it is brand new, you say it has 20,000 cycles of life and so you fly 1,000 cycles every year; that means that you expect those engines to run for 20 years. At 20,000, it goes to zero, you cannot use those engines until it goes back to shop for overhaul and those materials that are time-related are replaced. Those cost for us are much.
So, that trip for us from the international airport, 10 minutes sometimes more across runway, it’s something we calculate daily any time after 6p.m. You know that, that is additional cost for the airline.
The issue of the Air Field Lighting (AFL) has been on for years, what efforts have the airline operators taken to address this issue with the government?
We will continue to engage the Federal Airports Authority of Nigeria (FAAN), anything that brings savings to an airline, we will likely pursue vigorously, but we also note that FAAN themselves face challenges in respect to funding.
I think the entire industry is in a situation were significant sums of money needs to be injected into the system to assist it.
The United States airlines, even, not flying at full capacity, government has supported them with funding. That is important to make government aware that an airline itself to a nation is not necessarily about an airline.
Most airlines will not be profitable apart from the so- called low cost carriers, but when you take the entire network of services they provide as a portfolio, hotel chains, other support services on ground, ground handling and all that are profitable because the airlines exist.
The overall contribution of aviation industry to the Gross Domestic Product (GDP) of any country is very critical. That is why government should have its eyes when looking at an airline, how does the airline contribute to the economy? These vaccines for COVID-19, I’m sure they all came by air. Just take a look at the many service providers like the Skyway Aviation Handling Company (SAHCO) Plc, the Nigerian Aviation Handling Company (NAHCO) Plc, airports facilities, Murtala Muhammed Airport two (MM2), Lagos and the staff they employ, the effect of the airline sub-sector in the entire system is very important.
So, those nations that realise that take advantage to make sure that the airlines exist. It keeps the economy going, including the tourism sector and others.
If you go to Ethiopia, the country is centered on aviation, they built one of the biggest hotels in Africa as an airline, they’ve taken over the terminal fully, you can see what they are doing.
They are actually taking care of cargo transportation in and out of their country. They have a huge network, they may not necessarily have a robust domestic network like us here, but I think their global network is quite interesting.
Until government becomes aware of that someone is able to say this is what the airlines contribute to the economy, until that is clear, that is when they will see why you need to keep the airlines alive.
In more specific terms, how much was Arik Air debts before AMCON took over its management in 2017?
In terms of the debt, I will like to say it is quite significant. It was over N300 billion; I am not going to be specific about it. Since we took over, I am aware that there have been some attempts to engage the owners to make some payment. I am not aware that any payment was done. I think that answers the question.
